Mega Thread on Exit Strategies (Long-Mid Term Portfolios) 👇
We talk about systematic exit a stock portfolio in a bear market in this 🧵
Most have made good profits in stock positions and its always good to be aware of what can be done when markets turn bearish
Read on.
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1. Death Cross (50MA Crossunder 200MA)
This is a popular method to judge whether the stock/index is in a bear or bull market.
Book profits at a death crossover
My view: Not the best way of exit, there are better, more refined ways.
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2. MA based Systematic Exit
MAs used:
21MA - 1 mnth avg.
65MA - 3 mnth avg.
150MA - 6 mnth avg.
250MA - 1 year avg.
Exit 25% if 21MA below 65MA
Exit 25% if 21MA below 150MA
Exit 50% if 21MA below 250MA
This method handles short term correction while having skin in game
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3. ATR based Stop (Supertrend, Chandelier Exit, Chande Kroll)
For positional exit, ATR based trailing stop can be used.
ATR multiples are 3(aggressive), 5(conservative) are used
My preference is exit 25% on ATR(20,5) breach daily, full position on ATR(20,3) breach wkly
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4. Ichimoku KUMO Breach
The KUMO cloud offers good support areas.
Exit 25% on breach of top of cloud
Do nothing while price inside the cloud
Exit FULL when price breaches cloud on downside
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